France sold Russia two warships for €1.4B — then Crimea made delivery impossible

In January 2011, France and Russia signed a €1.37 billion contract for two Mistral-class amphibious assault ships — the Vladivostok and the Sevastopol. It was the largest arms sale from a NATO country to Russia since World War II. President Sarkozy announced the deal as a strategic partnership that would modernise the Russian navy while saving thousands of jobs at the STX France shipyard in Saint-Nazaire and DCNS in Brest. France would transfer full naval-building technology to Russia so it could build more Mistrals itself.

The deal was controversial from the start. NATO allies — especially the Baltic states, Poland, and the United States — protested that selling advanced naval technology to a neighbour that had invaded Georgia in 2008 was strategically reckless. Lithuania's defence minister called it "a mistake." Six US Republican senators complained to the French ambassador. But France calculated that the economic prize — a €1.4B contract, jobs for its shipyards, and a foothold in the Russian naval market — outweighed the geopolitical risk.

In March 2014, Russia annexed Crimea. By September, President Hollande had suspended delivery of the Vladivostok. Russia demanded either the ships or its money back — $1.53 billion. For eleven months France tried to find a way through: deliver and face EU sanctions, or cancel and pay the penalty. In August 2015, Hollande and Putin agreed: France would keep the ships and refund Russia's partial payments.

Within a month, Egypt bought both ships for roughly €950 million. The defence trade still cites the Mistral deal as the textbook case of a commercial contract destroyed by geopolitics — a deal that looked like good business until the day it became impossible to honour.